Canada's economy showed signs of coming out of recession in August, creating a surprisingly strong 27,100 jobs as the country's private sector added workers for the first month in nearly a year.

But Canada's unemployment actually rose in the month by one-10th of a percentage point to 8.7 per cent, Statistics Canada said Friday.

That was because more people flooded the job market — 49,100 — in August than found work, increasing the number of men and women on the unemployment lines.

Still, the country's statistical agency said, Canada's employment market has improved in recent months simply because the rate of job loss has slowed since April.

"Over the last five months, employment has fallen by 31,000, a much smaller decline than the 357,000 observed during the five months following October 2008," Statistics Canada said.

Unexpected turn

Economists had predicted that the Canadian economy would shed approximately 15,000 jobs in August rather than add employment as was the case.

Cdn. private-sector job growth  (000s) 
Aug. +49.2 
July  -74.9 
June   -39.3 
May  -36.5 
April  -10.4 
Source: Statistics Canada

But analysts have cautioned in the past about reading too much into any one-month survey, pointing out that the national agency in April reported 35,900 job gains in the middle of a severe slump, only to take them all away in May.

In April, the number of self-employed persons jumped by 37,000, swamping the job losses reported by corporations.

In addition, the amount of full-time employment continued to fall in August, down another 3,500 jobs, but an improvement over July's tumble of almost 30,000 for 40-hour-a-week work.

Economists often argue that as companies come out of a financial downturn, they add part-time workers at a faster pace than full-time employees.

Reinforcing recent numbers

In the past couple of months, experts have pointed to gathering evidence that the industrialized economies have begun to grow rather than contract as has been the case for the past year.

For August, the U.S. Institute for Supply Management's index of future activity in the service sector rose to the "expansionary" category. In Canada, the service sector represents almost 80 per cent of total employment.

The Paris-based Organization of Economic Cooperation and Development also improved its 2009 forecast for many industrialized economies, predicting that the current contraction would be marginally less severe than initially expected.

The improved figures now have some economists talking more confidently in terms of a world financial recovery.

"The global economy is regaining traction, with virtually every region transitioning from recession to recovery around mid-year," noted Scotiabank Economics in updating its world economic outlook in September.

Scotiabank now predicts that the Canadian economy will shrink by 2.3 per cent in 2009 and grow by 2.8 per cent  in 2010.

486,000 jobs lost

Even as Canada's job market improves, however, the damage already done has been impressive.

Since last October, Canada has lost 486,000 full-time jobs, Statistics Canada estimated.

Besieged manufacturers, faced with collapsing worldwide and domestic demand for their goods, shed almost 231,000 employees since August 2008.

In addition, more than one-half of the total job loss has taken place in Ontario, where the employed workforce fell by more than 170,000 in the same period.

with files from Canadian Press